Which of the following statements about operating leverage is false? O a. Keeping all factors constant, the higher the contribution margin, the higher the operating leverage. O b. Operating leverage measures how operating income will be affected by changes in sales C. The degree of operating leverage is higher for companies with lower fixed costs d. All of the given answers are true. O e. If the degree of operating leverage higher for a company, this means that the company is more risky than another company with low degree of operating leverage.
Which of the following statements about operating leverage is false? O a. Keeping all factors constant, the higher the contribution margin, the higher the operating leverage. O b. Operating leverage measures how operating income will be affected by changes in sales C. The degree of operating leverage is higher for companies with lower fixed costs d. All of the given answers are true. O e. If the degree of operating leverage higher for a company, this means that the company is more risky than another company with low degree of operating leverage.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
30
Transcribed Image Text:Which of the following statements about operating leverage is false?
O a. Keeping all factors constant, the higher the contribution margin, the higher the operating
leverage.
O b. Operating leverage measures how operating income will be affected by changes in sales
c. The degree of operating leverage is higher for companies with lower fixed costs
d. All of the given answers are true.
If the degree of operating leverage higher for a company, this means that the company is
more risky than another company with low degree of operating leverage.
e.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education